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France’s central bank issues a warning against the risks of bitcoin trading

France’s central bank issued a warning against the risks of bitcoin trading. Last week, the bank warned that the price of bitcoin is inherently volatile, and that some users may find it difficult to convert their bitcoins into real money. They also highlighted the fact that bitcoin is anonymous and its unregulated nature made it suitable for money laundering and even sponsoring terrorism. The bank stressed that bitcoin is not a credible investment vehicle yet, and that it does not pose a threat to financial stability, but, importantly, that it also poses a risk for those who choose to invest, mainly due to the fact that it has no intrinsic value.

The Chinese central bank issued a warning along similar lines earlier the same week, citing mass speculation in bitcoin as a source of concern. This is a valid argument backed by many bitcoin supporters who see hoarding and speculation as the biggest threats to the development of a healthy bitcoin economy.

The European Commission does not appear to have a clear stance on bitcoin. The commission insists that all those involved in illegal activities using bitcoin should face penalties, but in essence this position is largely meaningless, as it already applies to ‘regular’ currency.